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prospects in 1951 |
:: Possibilities for future development
Since gold is by far the chief mineral produced in the Region, the general success of mining as a whole depends upon the fortunes of the
mineral. The present position and potentialities of existing producers give a fairly clear indication of the future possibilities of gold
mining as a whole.
In the Barberton district the chief organizations engaged in gold production are the Eastern Transvaal Consolidated Mines, Ltd., the Fairview
Mines, the Andrews Group and the Findmine Groups.
The facilities and holdings of the first three groups comprise adequate scope for sustained output over many years and attached to each of
these are a number of speculative ventures which are not at present worked, but if the base-metal content of the ore could be converted to
revenue, expansion to incorporate these may be possible.
In the Pilgrim's Rest District the future of gold-mining depends very much on the fortunes of the Transvaal Gold Mining Estates, Ltd. Should
this company be forced to curtail operations due to lack of profit-earning ability or other reasons, mining would undoubtedly cease to play
the important part that it has done in the development of the district. Base metals have been of little account in the past and without the
discovery and development of new occurrences their part in the future mining activities of the district seems limited.
The rock formations of the Drakensberg which form the Pilgrim's Rest gold fields have been well prospected. Due to this extensive
exploratory work and the nature of the ore-bodies, it seems that the future depends more upon the economical working of the gold reefs in the known
areas than on the discovery of new deposits.
In the Region as a whole the expansion of gold-mining largely depends upon the revenue-producing potential of each mine. Under existing
conditions there is scope for expansion but the following factors hamper it.
a) Capital. The Region's past history and present uncertainty regarding the behaviour of deposits have been the chief causes of the lack of
interest displayed by financiers. As a result, individuals and local companies had to build up the field afresh on revenue from the mines.
Very useful information has been collected over the years in regard to the economic size of mines, treatment of refractory ore and geological
aspects. This information, however, was attained at a vast capital cost to the producers.
Gold production figures give no indication of the true facts and achievements. Whereas in past years adequate scope for gold production
existed in the oxidized zones , today by far the major proportion of production is from sulphide and refractory zones. This transition was
effected wihtout loss of output; in fact, output has steadily improved. Apart from metallurgical developments, capital for power and for the
natural growth of these mines was necessary and was drawn from mining revenue.
b) Taxation. As pointed out earlier, one of the main reasons for successful operation hinges on collective security based on consolidation
of small workings. The various producers so formed may be combined under the control of a company when taxation is levied on the combined
output in terms of the Gold Tax Formula and the real benefit to small mines of the sliding scale of taxes provided for by the formula is
lost.
The establishment of sound economic collective organizations has made possible sustained output from the mines, but has also provided a
steady revenue to the State at the expense of further development of the mines. It is admitted that the profit-revenue ratio which is the
deciding factor in tax compensation does benefit the mines but the question to be answered is whether the State has also contributed in
capital expenditure towards a taxable income from these mines. In other words, the State has assisted in the provision of power and railway
facilities in the Orange Free State and on the Witwatersrand to serve the mines there. Similar services have not been rendered to these mines
to the same extent, yet the tax formula together with capital redemption facilities are identical in both instances.
New mines in those fields are afforded reasonable terms for redemption of initial capital. On the other hand, outside mines have been
established as a result of the gradual expansion of small workings but constantly subject to a meagre to a meagre redemption of current
capital expenditure on expansion and provision of facilities which should have in the first place been provided by the State.
Taken over the life of a mine on the Witwatersrand, the ratio of current capital expenditure to revenue earned on these mines is in certain
cases more than 100% higher. Cash outlay in current capital requirements is derived from mining revenue after the State has had its share,
which leaves very little for distribution to shareholders, hence the lack of interest and slow development operations.
c) Labour. With increased afforestation and timber milling along the Drakensberg, with the development of the Lowveld as a farming area and
the increased mining and other activites in neighbouring districts and in the Union as a whole the problem of an adequate supply of Native
Labour, upon which the existence of the mines depends, has become increasingly difficult.
d) Power. The high installation and operating cost in connection with motive power is one of the major factors precluding expansion. The
current rate of f85 per kW. installed and costs at an average for the district excluding the biggest stations at about 2.5 pence per kW/hr.
illustrate the difficulties for increased output.
The first consideration in starting up or increasing the tempo of mining operations is that of power supply. This fact not only hampers
producers but kills an enterprise at the very beginning, as a reasonable mining risk becomes a doubtful speculation when the additional
capital for power is taken into consideration.
The deciding factor in considering the future, calls for an assessment of past achievements in the light of prevailing circumstances. If
mining in the district develeped despite negative assistance from the State, it is reasonable to expect that developments now visualized
could be brought to successful fruition by active State interest in the form of a revised taxation formula, the provision of essential
services, and by assistance to bring account base metals contained in gold-bearing areas.
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